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Groupon, Inc. (GRPN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 consolidated revenue was $130.4M, down 5% year over year; Adjusted EBITDA was $18.7M; net loss was $50.1M as other income/expense swung negative on FX, while operating cash flow and free cash flow were strong at $67.0M and $63.2M, respectively .
  • North America Local returned to growth: Q4 billings +8% year over year and Local revenue flat; consolidated units rose to 10.3M (+18% sequential), indicating improved conversion and marketplace quality; cash and equivalents ended at $228.8M .
  • International declined on Italy exit; excluding Italy, International revenue fell 1% and International Local rose 1%, reflecting early progress in core markets (Spain, U.K., France, Germany) .
  • Management guided to slightly negative billings in Q1 2025 (seasonality, lower take rates) but expects FY 2025 billings and revenues to grow with Adjusted EBITDA and free cash flow better than 2024; marketing spend targeted at ~30–35% of gross profit with SG&A “flattish” year over year .
  • S&P Global consensus estimates were unavailable at time of writing; comparison to Street is not shown (attempted retrieval resulted in limits). Estimates context provided below.

What Went Well and What Went Wrong

What Went Well

  • North America Local billings grew 8% year over year; consolidated gross billings held at $430.1M with sequential unit acceleration to 10.3M, signaling improved platform performance and curated supply strategy .
  • Cash generation was robust: operating cash inflow of $67.0M and free cash flow of $63.2M in Q4; trailing twelve-month operating cash flow $55.9M and free cash flow $40.6M, first positive FCF since the pandemic exit .
  • CEO emphasized transformation milestones (fraud detection, NA cloud, new website, ERP) and city-by-city strategy; “we rebounded nicely in the fourth quarter” with momentum in 2025 and “double-digit growth in key verticals” like Things To Do and Gifting .

What Went Wrong

  • Net loss of $50.1M vs prior-year net income, reflecting a large adverse swing in other income/expense (–$44.4M), and higher marketing intensity (36% of gross profit vs 28% prior year) .
  • International revenue fell 11% on the Italy exit; gross billings and gross profit declined mid-to-high single digits; International active customers fell to 5.1M (–17% year over year) .
  • Take rates are expected to remain lower year over year, pressuring reported revenue relative to billings; Q1 billings outlook “slightly negative” on seasonality with negative cash flow typical of post-holiday redemptions .

Financial Results

Consolidated P&L, Cash Flow, and Balance Metrics

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$137.716 $114.479 $130.379
Gross Profit ($USD Millions)$122.310 $102.895 $118.187
Marketing Expense ($USD Millions)$34.492 $36.258 $42.620
SG&A ($USD Millions)$72.492 $71.327 $72.462
Net Income (Loss) ($USD Millions)$28.489 $14.522 $(50.118)
Adjusted EBITDA ($USD Millions)$26.938 $14.767 $18.661
Operating Cash Flow ($USD Millions)$54.500 $(16.258) $66.963
Free Cash Flow ($USD Millions)$51.132 $(19.666) $63.221
Cash & Equivalents ($USD Millions, period-end)$141.563 $159.710 $228.843
Diluted EPS ($USD)$0.76 $0.33 $(1.20)

Segment Breakdown (Revenue, Gross Billings, Gross Profit)

Segment MetricQ4 2023Q4 2024
North America Revenue - Local ($M)$91.550 $91.229
North America Revenue - Travel ($M)$3.583 $2.833
North America Revenue - Goods ($M)$4.790 $2.629
Total North America Revenue ($M)$99.923 $96.691
North America Gross Billings - Local ($M)$257.192 $276.445
North America Total Gross Billings ($M)$300.271 $305.808
North America Gross Profit ($M)$87.484 $87.418
International Revenue - Local ($M)$32.004 $28.709
International Revenue - Travel ($M)$1.857 $1.497
International Revenue - Goods ($M)$3.932 $3.481
Total International Revenue ($M)$37.793 $33.687
International Total Gross Billings ($M)$136.057 $124.250
International Gross Profit ($M)$34.826 $30.768
Consolidated Gross Billings - Local ($M)$362.856 $374.482
Consolidated Gross Billings - Total ($M)$436.328 $430.058

KPIs and Operating Metrics

KPIQ4 2023Q3 2024Q4 2024
Active Customers - North America (MM, TTM)10.3 10.2 10.3
Active Customers - International (MM, TTM)6.2 5.3 5.1
Active Customers - Total (MM, TTM)16.5 15.5 15.4
Consolidated Units (000s)11,158 8,684 10,270
Contribution Profit ($USD Millions)$87.818 $66.637 $75.566
Marketing as % of Gross Profit28% 35% 36%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Billings GrowthQ1 2025Not quantitatively guided; Q4 seasonally strong; Q1 typically softer Slightly negative billings assumed for Q1; better Local vs Q4 but not double-digit Refined (explicitly softer Q1)
Take Rate vs YoYFY 2025Not explicitly guidedLower take rates year over year expected, making revenue trends more negative vs billings New detail (pressure acknowledged)
Adjusted EBITDAQ1 2025Not explicitly guidedPositive Adjusted EBITDA expected Introduced (positive)
Cash FlowQ1 2025Seasonality noted historicallyNegative cash flow expected in Q1 due to redemption seasonality Maintained seasonal pattern
Billings/RevenueFY 2025Transformation focus; NA Local growth targeted Expect growth in billings and revenues for FY 2025 Raised (explicit growth)
Adjusted EBITDA / FCFFY 2025Improving operations and cash generation Adjusted EBITDA and free cash flow “definitely better” than 2024 Raised
SG&AFY 2025Cost discipline improving cloud and payroll SG&A “flattish” year over year; pockets of savings to fund sales hiring Maintained
Marketing IntensityFY 2025Elevated as % of GP (20–35% trend in 2024) ~30–35% of gross profit, conditional on positive ROI; may spend more if ROI remains positive Maintained
FX ImpactFY 2025FX-neutral commentary only~100 bps FX headwind expected New detail
International MixFY 2025Italy exit noted in Q3 2024 Italy exited beginning Q2 2024; focus on Spain, UK, France, Germany Maintained focus

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Platform modernizationReliability challenges; progress on transformation 100% NA web/desktop on new front-end; gifting/video content Major migrations completed (fraud detection, NA cloud, new website, ERP); NA mobile app migration planned Q2 2025 Advancing execution
City-by-city market managementNA Local growing; curated focus Emphasis on marketplace understanding Top-5 NA metros with double-digit growth; scaling market management beyond largest metros Scaling playbook
Curated high-quality supply (WOW deals)NA Local revenues +7% YoY Product and gifting features emerging WOW food/drink deals to drive retention; consultative sales targeting quality merchants Positive adoption
GiftingNot highlighted quantitativelyIntroduced in product feature set Double-digit share of orders in peak holiday (low teens); far from 50% benchmark; inventory quality key Improving seasonality
Enterprise partnershipsNot emphasizedFinancing transaction; operating progress Enterprises prefer performance-based campaigns; expanding integrations; significant long-term opportunity Building pipeline
International core marketsNA-led narrativeItaly exit impact; Intl Local –13% YoY Intl Local –10% YoY; ex-Italy Intl –1% revenue and +1% Local; Spain near 2019 levels; leadership strengthened Stabilizing ex-Italy
Tariffs/macroGeneral uncertaintyGeneral commentary Minimal impact from U.S. tariffs due to Local focus; Goods <5% revenue and not expected to grow Limited risk

Management Commentary

  • “In 2024, we successfully executed our transformation strategy… After a bumpy Q3, we rebounded nicely in the fourth quarter, with North America Local Billings growing 8%” — CEO Dusan Senkypl .
  • “We are confident [2025] will be the year we return Groupon to sustained growth… city-by-city approach… with better cash position of $229M” — CEO Dusan Senkypl .
  • “Our plan expects we will be improving [customer acquisition] and slight improvement in retention… focus now is customer retention via WOW deals” — CEO Dusan Senkypl .
  • “We expect in Q1 still slightly negative trend in billings… lower take rates year over year… positive in adjusted EBITDA… Q1 negative cash flow due to seasonality” — CFO Jiri Ponrt .

Q&A Highlights

  • Market management and metro strategy: double-digit growth in top-5 NA metros driven by curated inventory and targeted city operations; scaling beyond the largest metros as processes mature .
  • Retention initiatives: WOW deals (food/drink, top brands) inserted shortly after first purchase to increase purchase frequency; improved platform stability boosted conversion and acquisition efficacy .
  • Gifting: peak holiday orders reached low double-digit share, materially higher year over year; management targets higher-quality inventory (e.g., premium massages) to raise gifting mix over time .
  • Enterprise demand: Groupon’s performance-based campaigns resonate with enterprises (fixed-cost/membership categories); technical integrations are a near-term bottleneck but opportunity is large .
  • Macro/tariffs: goods are <5% of revenue; minimal expected tariff impact; Local experiences dominate mix .
  • FY 2025 framework: billings/revenue growth expected; SG&A flattish; marketing 30–35% of gross profit contingent on ROI; FX headwind ~100 bps .

Estimates Context

  • Wall Street consensus (S&P Global/Capital IQ) for Q4 2024 revenue/EPS/EBITDA was unavailable at time of writing due to data access limits; as a result, explicit beat/miss versus Street cannot be shown. Values retrieved from S&P Global were unavailable during this session; we attempted retrieval but encountered a daily request limit.

Key Takeaways for Investors

  • North America Local has turned a corner with billings +8% YoY in Q4 and units +18% sequential, validating curated supply and city-by-city strategy; this is the core near-term growth driver .
  • Strong Q4 cash generation (OCF $67.0M; FCF $63.2M) and cash balance ($228.8M) provide runway to fund sales/marketing and integrations; watch for seasonal Q1 cash outflows as vouchers are redeemed .
  • Reported revenue will lag billings where take rates compress; model top-line with take rate headwinds in Q1 and potentially FY 2025 even as billings grow .
  • International ex-Italy is stabilizing with early signs (Spain near 2019 levels); scaling the NA playbook to U.K./France/Germany could support FY 2025 growth .
  • Quality-over-quantity supply and WOW deals should lift retention and frequency; evidence includes higher conversion and gifting mix in peak season—monitor purchase frequency KPIs and contribution profit .
  • Debt profile changed with 6.25% secured converts due 2027 ($197.3M issued/exchanged); note covenants and potential 2.5% additional interest tied to SumUp collateralization milestones by Nov 20, 2025 .
  • Near-term trading catalysts: city-level growth updates, NA mobile app migration in Q2 2025, retention metrics (WOW deals), and any progress on enterprise integrations; risk factors include FX, take rates, and Q1 seasonal softness .